Once hailed as the growth engine of the real estate industry, commercial realty suddenly became a liability for developers and the ready prime projects had no takers, during the recent economic slowdown. With a shortfall in demand and liquidity crunch, ‘affordable housing’ gained importance and the focus of even commercial realtors took a shift. Many of the upcoming commercial realty projects came to a standstill and instead, more affordable housing projects were launched. While office spaces remained unoccupied, the retailers in malls bargained hard to renegotiate prices and to include minimum guarantee clauses in the agreement, or enter into revenue sharing agreements. saha Meghdutam encore Noida extension
As per a report by real estate consultancy firm, Cushman & Wakefield, the year 2009 ended with a 29 per cent decline in space absorption, compared to the previous year. The total absorption of commercial space across major Indian cities stood at 26.3 million sq ft in 2009, compared to 37 million sq ft in 2008. Mall supply during 2009 fell short by 60 per cent, as only 5.7 million sq ft of space was delivered across major cities in India. The report points out that the poor demand from retailers forced developers to defer the expected mall supply of around nine million sq ft.
Of the proposed 44 malls at the beginning of the first quarter (January-March), about 18 were delivered by the year-end. The overall vacancy rate for the major cities as of December, 2009, was 17 per cent, compared with a 16.7 per cent vacancy rate in December, 2008. saha Meghdutam encore Mumbai had the largest share of mall supply, in 2009, at 1.8 million sq ft, followed by Hyderabad (1.1 million sq ft) and the National Capital Region (NCR) (0.9 million sq ft). Bangalore saw the highest mall supply deferment, with 80 per cent less mall supply than what was expected. This slowdown in mall construction reflected a negative growth indicator, for the commercial real estate segment.
However, the projection for the year 2010 and ahead, suggests that the worst for commercial real estate could be over. According to a report by the DTZ, a real estate services group which undertook a study to examine how this recovery will come about and analyse what this means for the future, the recovery appears visible and inevitable . The research report, called ‘The Second Coming’, says that major office markets in India will revive by Q2, 2010, with increased interest from tenants and a downward correction in rentals taking place.
This projected indication of recovery has given commercial realtors in India a much-needed relief, after having weathered a liquidity crunch, slackening demand , piling inventory and falling rentals, for over a year. Many of them believe that the pace and scale of market recovery will be led by the tier-I cities of Delhi-NCR, Mumbai and Bangalore. Tier-II cities, such as Kolkata and Chennai, will see a gradual recovery in the later part of 2010, while the Pune market is unlikely to see any major changes.